FEBRUARY 11, 2015
After more than 25 years helping small business start and run their bookkeeping, I've learned there are some common errors people do over and over when operating their businesses. Left uncorrected, these errors end up costing that small business owner a lot of time, pain and money. Let's face it, for most of us, bookkeeping isn't the most exciting part of our business but like it or not, it is the backbone that holds it all together. This month, I'm sending out 20 tips I've collected through the years to address the most common problems I run in to - they may seem like plain old common sense but I hope you find them helpful.
Michelle Carley, Owner, Big E-Z Bookkeeping
Bookkeeping Tip #1: Start at the End to Determine Your Expense Categories
When starting a new business, determine what expense categories to track by taking a look at the tax return you or your accountant will need to file. If you are required to file a Schedule C, go online to get a copy of a blank Schedule C and write down all the categories that apply to your business. Then include those categories when you set up your bookkeeping system. Here’s a helpful list of categories to help you get started.
Bookkeeping Tip #2: Don't Over-Categorize
Most of us tend to make things harder than they need to be. For instance, when categorizing office supply expenses, we don't need separate categories for fax paper, letterhead and printer cartridges, and so on. All these items can simply be listed under Office Supplies.
Bookkeeping Tip #3: Set Up Your Accounting Software Correctly
The biggest mistake people make is not taking the time to set up the software correctly when they install it on their computers. The old saying "Garbage in- garbage out" applies here. If you want a financial report you can trust, you will need to be sure it is set up correctly from the start.
Bookkeeping Tip #4: Know the State Law on Voided Payroll Checks
Before voiding a payroll check, call your state or consult your attorney to see if this is legal in your state.
Bookkeeping Tip #5: Check Out Credit Unions for Lower Rates
Some credit unions offer business checking accounts at lower rates than most banks. Check them out the next time you need to reprint checks. And if you've been turned down for a loan by a bank, you might find a credit union happy to extend financing---even at a lower interest.
Next week… five more tips for running your business right.